Meta Platforms beat first-quarter earnings estimates. Revenue climbed 33% to $56.3 billion. Net income surged 61%. Yet shares plunged 6% to 10% after hours. Investors recoiled at the capex hike.
The company raised its 2026 capital spending forecast to $125 billion to $145 billion, up from $115 billion to $135 billion. Higher component costs, especially memory chips, drove the increase. Data center expansions followed close behind. CFO Susan Li explained on the earnings call: “This reflects our expectations for higher component pricing this year and, to a lesser extent, additional data center costs to support future year capacity.” Quartz captured the tension.
And then the layoffs. Meta plans to cut 10% of its workforce—about 8,000 jobs—effective May 20. It will also scrap 6,000 open positions. Chief people officer Janelle Gale called the moves structural, aimed at efficiency. This follows smaller cuts in Reality Labs and other units earlier this year. Headcount stood at 77,986 as of March 31, up 1% year over year. But not for long.
CEO Mark Zuckerberg frames it as AI amplification. “AI isn’t going to replace people. Instead, I think that AI is going to amplify people’s ability to do what they want,” he said. The company now runs “AI Weeks,” tags workers as “AI builders,” and groups teams into “AI pods.” Small squads replace bloated ones. What took dozens months now takes one or two people weeks. Li added uncertainty: “I think there’s a lot of change right now, with AI capabilities advancing rapidly… I don’t really know what the company’s ideal head count looks like.” Business Insider detailed the shift.
Capex Explosion Powers AI Ambitions
Meta’s spending dwarfs revenue gains. Q1 capex hit $19.84 billion, below estimates but signaling more ahead. The company inked deals with Amazon Web Services for Graviton chips, plus CoreWeave, Nebius, Google, Nvidia, AMD, and Broadcom. Superclusters like Prometheus in Ohio and Hyperion in Louisiana demand gigawatts. A $10 billion El Paso data center targets 1 gigawatt by 2028. CNBC tracked the partnerships; Quartz the deals.
Reality Labs bleeds cash. Another $4 billion operating loss in Q1. VR and AR hardware falter amid the pivot. Zuckerberg eyes AI wearables over metaverse dreams. The unit lost 1,000 jobs in January. Still, total expenses guide to $162 billion to $169 billion for 2026, fueled by infrastructure and AI talent pay.
User growth stuttered. Family daily active people dipped 20 million to 3.56 billion. Iran internet disruptions and Russia’s WhatsApp ban took blame. Bundled metrics hide app-specific woes. Ads clicked strong, though. Revenue beat powered by that core machine.
Wall Street watches the clock. Big Tech—Meta, Microsoft, Alphabet, Amazon—dumped $133 billion in Q1 capex, up 70%. On pace for $725 billion yearly. Depreciation now gnaws earnings. AI revenue? Sparse so far. Wall Street Journal warns of the bill.
Workforce Overhaul Meets Investor Skepticism
But Meta pushes. Hired Alexandr Wang, ex-Scale AI CEO, as chief AI officer via a $14.3 billion stake. Poaches talent with $1.5 billion packages for single engineers. Muse Spark, a new model from Meta Superintelligence Labs, debuted early promise. Llama delays linger in memory.
Stock reaction sharp. Erased $175 billion market value. Traders bet on Polymarket: 84% odds for tech cuts. Analysts split—some cheer discipline, others fear margin squeeze. Reuters noted legal clouds too: youth social media backlash risks “material loss.” Reuters.
Zuckerberg doubles down. “We’re on track to deliver personal superintelligence to billions of people.” Payroll converts to capex. 8,000 gone. 6,000 roles frozen. $115 billion-plus poured into silicon and steel. Margins hold—for now. Efficiency via elimination.
Competitors mirror. Microsoft buyouts. Block’s 40% slash. AI eats jobs, spits superclusters. Meta leads the charge. Investors grip tight. Payoff looms. Or not.
One truth clear. 2026 tests the bet. Zuckerberg’s sprint reshapes tech’s biggest player. Humans out. Machines in. Billions bet on it.
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